UN: "If China's Growth Rate Drops by 1%p, South Korea May Also Decline by Over 0.2%p"

[Asia Economy Reporter Kim Daehyun] An analysis has emerged suggesting that if China's growth rate falls by 1 percentage point this year, South Korea's growth rate could also decline by 0.2 percentage points.

According to the "World Economic Situation and Prospects 2023" report released on the 29th by UN-affiliated organizations, the United Nations Department of Economic and Social Affairs (UN DESA) projected through a global economic forecasting model that if China's growth rate drops by 1 percentage point, South Korea's growth rate is expected to decrease by about 0.2 percentage points. Among the 14 countries mentioned in the report (including Hong Kong and Taiwan), South Korea ranked eighth in terms of the magnitude of decline.

Gyeonggi Uiwang IDC / Uiwang = Photo by Jang Jin-hyeong aymsdream@

The growth rates of East Asian and Southeast Asian countries are estimated to decrease by 0.06 to 0.41 percentage points. Countries affected by a decline of around -0.4 percentage points include Singapore and Vietnam; around -0.3 percentage points include Cambodia, Hong Kong, and Brunei; around -0.2 percentage points include Taiwan, Mongolia, and South Korea; and around -0.1 percentage points include Laos, Myanmar, Malaysia, the Philippines, and Thailand.

The report forecasts that China will fundamentally grow by 4.8% this year, supported by the lifting of the "zero-COVID" policy and real estate market stimulus measures. This surpasses last year's growth rate of 3.0%.

South Korea's growth rate forecast for this year is 2.0%. Developing countries in East Asia and Southeast Asia, excluding Japan, are estimated to grow overall by 4.4%.

The report evaluated that considering the financial and trade relationships between China and other countries, China's growth rate significantly impacts other nations as well. The recovery of the Chinese economy underpins the growth of the entire region. If China's real estate market stabilizes, countries exporting construction raw materials to China could benefit, and if Chinese overseas tourism resumes, it would be favorable for countries with a large tourism industry share.